What Is Average Order Value (AOV)?

AOV refers to the average dollar amount that customers spend each time they place an order with your business. It's calculated by taking your total revenue from sales and dividing it by the number of orders received.

For example, if you sold $100,000 worth of products in a month and received 500 orders, your AOV would be $200 ($100,000/500). This metric gives you an idea of how much customers are spending on average and how much revenue each order is generating.

Why is AOV important?

AOV is important because higher spending customers are more valuable to your business. If you can increase AOV, you'll make more money without needing extra traffic or new customers. 

Getting customers to spend just a little bit more with each order can have a big impact on your bottom line. Continually testing ways to increase AOV and enhance the customer experience is key to boosting revenue and profits.

How to Calculate Average Order Value for Your Business

To increase your average order value (AOV), you first need to know what it is and how to calculate it for your business. AOV refers to the average amount of money spent by a customer in a single purchase. It's a key metric for any ecommerce business because higher AOVs generally mean higher revenue and profits.

Calculate Your AOV

To calculate your AOV, simply take your total revenue from sales over a given period of time and divide it by the number of orders placed in that same time frame. 

For example, if you made $100,000 in sales over the last month from 500 orders, your AOV would be $100,000 / 500 = $200.

7 Strategies to Increase Your Average Order Value

Once you know your AOV, you can start implementing strategies to boost it. Offering product bundles, upsells, or cross-sells is an easy way to increase order sizes.

You should also provide plenty of product education and recommendations on your site to spark ideas for additional purchases. Contextual in-app messages promoting new products, sales, or bundles are another way to drive bigger baskets.

With the right strategies in place, you'll see your AOV—and profits—steadily rise.

1) Offer free shipping

Free shipping is a major incentive for customers and encourages them to spend more. When customers don’t have to pay for shipping, they tend to add more items to their cart to make the order worthwhile. Offer free shipping on orders over a certain amount, like $50 or $75.

2) Upsell and cross-sell

Upselling and cross-selling are effective ways to increase your average order value. Upselling means suggesting a higher-priced item to replace the one the customer has selected. For example, suggesting the larger screen size or memory size. Cross-selling means suggesting complementary products to the one the customer is buying. For example, suggesting a case or accessories to go along with the tech product they're purchasing.

3) Bundle and package products

Bundling several products together in a package deal is an easy way to increase your average order value. You can bundle products that naturally go together and offer them at a discount. Customers will often spend more to get the bundle deal. For example, bundling a phone, case, headphones, and portable charger together.

4) Run promotions and sales

Running promotions and offering coupons will motivate customers to spend more to take advantage of the deals. For example, offering percentage discounts on larger orders, bonus gift cards for spending over a certain amount, or buy one get one deals. These types of promotions will drive customers to increase the size of their orders.

5) Offer subscription and loyalty programs

Subscription and loyalty programs keep customers coming back to make repeat purchases. With a subscription, customers sign up to receive regular product deliveries. This creates an ongoing stream of sales. Loyalty programs that offer rewards and incentives for making purchases will also encourage customers to spend more to earn those benefits.

6) Improve your product descriptions and images

High-quality product descriptions, images, and video content help customers to better understand and connect with your products. The more interest and desire you can build around your products, the more customers will want to add to their carts. Focus on highlighting benefits, features, and uses of your products by using in-app nudges like tooltips, spotlight, coachmarks, etc.

7) Make it easy to spend more

The easier you make it for customers to spend more, the more likely they are to do it. Things like prominent “add to cart” and “buy now” buttons, suggesting additional products within the cart and checkout flow, and offering one-click reordering of past purchases will nudge customers to increase their spends.